Shareholders’ Disputes

While it may be an advantage to have partners in business to shoulder the burden of operations – at Granville Law Group we have seen time and time again – too many voting shareholders, especially without a Shareholder’s Agreement, is likely to be bad for business and corporate administration.

Even an excellent Shareholders’ Agreement may not save the day completely, but it will make a conflict resolution easier by providing mechanisms for it, including step-by-step procedures for the departure of unhappy shareholders, determination of and resolving disputes about share prices for a buyout. 

Nonetheless, you will do well if you respect your fellow shareholders and solve problems before they become litigious or sever relationships before they take you to court.  

Granville Law Group lawyers will assist with negotiations with unhappy shareholders and structure and implement settlement that will leave all the parties if not entirely happy then at least content. 

In severe cases when the matter still proceeds to court, we can assist with that as well.

FAQ for Resolving Shareholder Disputes

1. What are common causes of shareholder disputes?

Common causes of shareholder disputes include disagreements over business direction, financial issues, breach of shareholder agreements, conflicts of interest, and unequal contributions or rewards among shareholders.

2. How can a shareholder agreement help prevent disputes?

A shareholder agreement can help prevent disputes by clearly defining the rights and responsibilities of shareholders, establishing procedures for decision-making, and outlining processes for resolving conflicts.

3. What steps should be taken when a shareholder dispute arises?

When a shareholder dispute arises, the first steps include reviewing the shareholder agreement, engaging in open communication, seeking mediation or arbitration, and, if necessary, consulting a lawyer to explore legal options.

4. What is mediation, and how can it resolve shareholder disputes?

Mediation is a voluntary process where a neutral third party helps shareholders negotiate and reach a mutually acceptable resolution. It is often quicker and less costly than litigation.

5. What legal actions can be taken if a shareholder dispute cannot be resolved amicably?

If a shareholder dispute cannot be resolved amicably, legal actions may include filing a lawsuit for breach of contract, seeking a court order for the sale or purchase of shares, or requesting the dissolution of the corporation.

6. How can minority shareholders protect their interests in a dispute?

Minority shareholders can protect their interests by ensuring the shareholder agreement includes protective clauses, such as requiring a supermajority for major decisions, and by seeking legal advice to understand their rights and options.

7. What role do lawyers play in resolving shareholder disputes?

Lawyers play a crucial role in resolving shareholder disputes by providing legal advice, representing shareholders in negotiations or court, drafting or reviewing shareholder agreements, and ensuring compliance with relevant laws and regulations.